In the money: H&M coy around details of new brand
While H&M Hennes & Mauritz confirmed plans to launch a new brand yesterday (29 March), it has remained cagey about what form that brand will take, and what its plans are for the chain.
A spokesperson for the retailer confirmed to just-style that the new, unnamed brand will sit in a sit in a higher price segment than its other brands, which primarily cater to a young or fast fashion consumer base.
The chain, set to launch in 2013, will first open in a "European city," investor relations manager Nils Vinge told analysts after announcing its first-quarter results yesterday, but would not be drawn further on when it would launch or who it would be targeting.
However, Vinge did emphasise that the brand would not be a luxury version of Cos, but would instead "build on the positive experience of Cos".
He said the retailer's experience in successfully launching the Cos brand puts it in a good position for the launch of this new, unnamed brand. In recent years, the company has acquired brands including Monki, Weekday and Cheap Monday, while launching Cos from scratch. Of these companies, Vinge said Cos has "gone the furthest", which gives the company confidence in this new project.
The company will also work to broaden the H&M brand into new product categories and areas, said Vinge. He added that the company plans to open some 275 more stores over the coming year, with China, the US and the UK set to see the lion's share of the growth. In the autumn, the retailer will open its first stores in Latvia, Malaysia and Mexico, as well as Thailand under franchise.
The comments came as the company recorded a 4.6% increase in first-quarter net profit to reach SEK2.7bn (US$411.2m). Sales increased 13% in local currencies to SEK27.8bn. However, gross margin declined to 55.8% from 57.8% in the same period of the prior year.
Vinge attributed the decline in margin to a decision by the company not to pass on higher input costs, combined with higher expenses due to investments the company is making in strengthening the buying, production and IT divisions ahead of the launch of the new brand.
H&M expects to see the benefits of falling cotton prices going into the third-quarter, as its buying strategy means there is a "considerable lag" before the effects of lower cotton prices feed through.
He emphasised the company's long term focus, saying it would be easy for it to boost profits in the short term, for example by "raising prices and avoiding long-term investments".
"It would be easy for us, but unwise," he said. "We will always put the customer first and I am convinced that this is the right strategy going forward so we can continue our profitable growth for many years to come."
An interactive databank with intelligence on the major apparel sourcing countries
Anyone believing that human rights abuses are endemic in offshore production should compare the levels of protection afforded to factory workers in the developing world supplying major Western brands ...
The degree to which retailers tailor their offer to local markets emerged as a key theme at the Wold Retail Congress yesterday (19 September) - and it seems there are as many different strategies as t...
Members of the Association of Suppliers to the British Clothing Industry (ASBCI) are calling for increased training within the UK's fashion and textile industry....
Low consumer confidence, poor weather and negative currency effects hit H&M Hennes & Maurtiz's third-quarter margins and earnings, the fashion retailer said today (27 September). ...
India's plans to ease rules on foreign investment in retail yesterday (20 September) came into effect, even as protests against the policy took place throughout the country....
A sourcing deal inked more than two years ago between Li & Fung and Wal-Mart Stores has been replaced by a new agreement that allows the global supply chain manager to offer a range of new services to...
Japanese retail giant Fast Retailing Co has shuttered nearly one-third of its Uniqlo casual clothing stores in China following anti-Japan demonstrations in the wake of a diplomatic dispute between Asi...
- How apparel retailers should react to Brexit
- US fashion firms share their sourcing strategies
- Britain votes for Brexit – what happens next?
- Retailers warned of high volatility in Brexit wake
- Brexit uncertainty over pending EU trade deals
- Alliance cuts ties with three more factories
- Online fabric platform to "revolutionise" buying
- Columbia rain jacket a milestone in sustainability
- Better Work Vietnam launches labour law mobile app
- Uniqlo said to be scaling back US expansion
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- Primark Stores Limited: Retailing - Company Profile & SWOT Analysis
- Clothing & Footwear Retailing in Indonesia– Market Summary & Forecasts
- Clothing & Footwear Retailing in China – Market Summary & Forecasts
- Clothing & Footwear Retailing in Denmark